Press
Contact:
Liz
DeCastro
Iridium Satellite
LLC
+
1 (301) 571-6257
liz.decastro@iridium.com
IRIDIUM
REPORTS SECOND QUARTER 2009 RESULTS
|
-
|
Subscribers
Up 23.9% from Prior Year Quarter to
347,000
|
|
-
|
Subscriber
Growth of 71.4% in Emerging Machine-to-Machine
Market
|
|
-
|
Revenue
Up 1.2% from Prior Year
Quarter:
|
|
-
|
Commercial
Service Revenues Up
21.6%
|
|
-
|
Government
Service Revenues Up 15.2%
|
|
-
|
Equipment
Sales Declined 25.7%
|
|
-
|
Operational
EBITDA1
Up 31.5% from Prior Year
Quarter
|
|
-
|
Net
Income Up 52.9% from Prior Year
Quarter
|
|
-
|
Full
Year 2009 Operational EBITDA Guidance Lifted to $123-130
Million
|
BETHESDA,
Md. – August 10, 2009 – Iridium Satellite LLC (“Iridium”), the only provider of
truly global mobile satellite services (“MSS”), today reported consolidated
financial results for the three months ended June 30, 2009. The company reported
growth in subscribers, revenue, Operational EBITDA and net income for the second
quarter 2009 compared to the second quarter 2008. In addition, the company is on
track to complete its planned transaction to combine with GHL Acquisition Corp.
(“GHL Acquisition”) (NYX: GHQ, GHQ.U and GHQ.WS), which will take Iridium
public.
Operating
Highlights and Transaction Update
The
following consolidated financial results for the second quarter 2009 continue to
demonstrate the company’s strength despite the global economic downturn.
Subscribers were up 23.9% to 347,000 at the close of the second quarter of 2009
from 280,000 at the close of the second quarter of 2008. Commercial service
revenue increased 21.6% to $39.9 million in the second quarter of 2009 compared
to $32.8 million during the same quarter in 2008. Government service revenue
increased 15.2% to $18.2 million in the second quarter of 2009 compared to $15.8
million in the same quarter of 2008. Subscriber equipment revenue for the
quarter declined 25.7% to $24.6 million compared to $33.1 million in the second
quarter of 2008. Overall revenue increased 1.2% to $82.7 million in the second
quarter of 2009 from $81.7 million in the previous year’s second quarter.
Operational EBITDA increased 31.5% to $36.7 million in the second quarter of
2009 from $27.9 million in the second quarter of 2008. Finally, net income
increased 52.9% to $28.6 million in the second quarter 2009 from $18.7 million
in the second quarter of 2008. New products, such as the Iridium OpenPort®
high-speed maritime communications system and the Iridium 9555 satellite phone,
contributed to the company’s gains in the second quarter of 2009.
Page
1/8
“Our
growth in Operational EBITDA is a result of increased commercial service and
government service revenues, and more than offsets a decline in equipment
revenue,” said Matt Desch, CEO of Iridium. “Iridium is the only truly global MSS
that works everywhere. Our products and services are reliable, cost effective
and essential to both commercial and government users. And, we have built a
large and growing subscriber base that has continued to generate strong
recurring revenue even in a weak economy. From a strategic perspective, we are
nearing the completion of our combination with GHL Acquisition, which will take
us public. Completing the GHL Acquisition transaction will be valuable as we
move forward with the development and launch of our NEXT constellation, which
promises even broader applications and services to our growing user
base.”
The
company expects further growth through the remainder of 2009 on the strength of
its growing subscriber base. As such, Iridium now expects 2009 Operational
EBITDA of between $123 million and $130 million, up 14% to 20% over 2008, on low
single-digit revenue growth.
“Iridium’s
second quarter results are impressive,” said Scott L. Bok, CEO of GHL
Acquisition. “The company’s continued growth – even in a weak global economy –
is further confirmation of the strength of this company and the attractiveness
of its value potential for GHL Acquisition and its sponsor, Greenhill. We
continue to be enthusiastic about Iridium’s strong prospects for the
future.”
Highlights
– Commercial
In
Iridium’s rapidly emerging Machine-to-Machine (“M2M”) business, short-burst data
(“SBD”) subscribers grew 71.4% in the second quarter of 2009 compared to the
second quarter of 2008, and Iridium experienced 60.0% growth in SBD service
revenue during the second quarter of 2009 over the same quarter in the prior
year. The breadth of Iridium’s data communications applications mirrors the
expansion in the company’s target vertical markets.
“There
are a growing number of applications being developed in the M2M market, and we
are only in the early stages of developing the full potential of this service,”
said Greg Ewert, executive vice president of global distribution channels for
Iridium. “We are pleased by the many opportunities presented to us through new
applications, such as asset tracking, that continue to add quantifiable value
and represent cost-saving solutions to a wide array of industries.”
Subscriber
equipment sales remained slow in the quarter due to the weak economic
environment. However, year-over-year comparisons of equipment revenue are
affected by $1.4 million of equipment amortization relating to sales of
equipment in prior years that are included
Page
2/8
in the
second quarter of 2008. Without the impact of the amortization, overall revenue
would have increased 3.0% versus 1.2%, and equipment revenue would have declined
by 22.4% versus 25.7%.
“Despite
the economy, sales of the Iridium 9555 and Iridium OpenPort increased in the
second quarter,” said Don Thoma, executive vice president of marketing for
Iridium. “In fact, we shipped our 1,000th Iridium
OpenPort unit in the quarter and realized strong revenue growth over the first
quarter of 2009 with this ground-breaking product. With its attractive hardware
package, ease of installation and low service costs, Iridium OpenPort has
provided a cost-effective alternative to the status quo. This has resulted in
strong usage driven by a variety of value-added applications, delivered by our
service partners, for ships’ business and crew welfare programs where there are
higher bandwidth communications needs.”
On the
regulatory front, initiatives ensuring the safety of people and assets continue
to fuel growth and generate revenues. Safety regulations related to air traffic
safety and maritime vessel tracking for homeland security require organizations
to outfit boats, aircraft, assets and personnel with satellite-based devices
that track and report factors such as location, speed, temperature and
status.
In the
maritime market, for example, Iridium is the key provider for Vessel Monitoring
Systems (“VMS”) for fisheries to meet regulatory requirements not only globally
but in very northern and southern latitudes where no other MSS is available. In
addition, Iridium is the only option for vessels’ Long-Range Identification and
Tracking (“LRIT”) communications needs in those regions. Likewise, Iridium
continues to make progress in aviation as it seeks certification for provision
of air safety services. Supported by air carriers seeking reliable
communications for their Polar routes, Iridium recently gained DO 262 and DO 270
approval, clearing the way for a flight certification program with the U.S.
Federal Aviation Administration (“FAA”) and Continental Airlines.
Highlights
– Government
Iridium
service revenue from its contracts with the U.S. Department of Defense (“DoD”)
grew 15.2% for the second quarter of 2009 compared to the second quarter of
2008. As previously announced, the U.S. Navy demonstrated its commitment to
Iridium by awarding the company a contract to fund the development and delivery
of the Distributed Tactical Communications System (“DTCS”) – an extension of
“Netted Iridium,” the push-to-talk platform. DTCS will provide over-the-horizon,
on-the-move, beyond-line-of-sight netted voice and data communications over the
Iridium network for U.S. and allied forces’ soldiers. In
Page
3/8
addition,
the DTCS program includes the development of several new, ruggedized Iridium
tactical radios to support the military’s communications needs.
“This
contract is an indicator of the U.S. Government’s commitment to expanding its
reliance on the Iridium network and its unique capabilities,” said Lt. Gen. John
Campbell (USAF, Ret.), executive vice president of government programs for
Iridium. “DTCS provides an enhanced two-way, push-to-talk, over-the-horizon,
on-the-move, beyond-line-of-sight capability, free of deployed ground
infrastructure, for our soldiers anywhere their missions take them. Iridium and
the DoD have been working collaboratively on this program for several years, and
we are pleased to be able to partner with the Navy to put more advanced and
further-reaching communications capabilities into soldiers’ hands.”
Iridium
also announced, in conjunction with Boeing, that the companies achieved two
major milestones to further develop and demonstrate capability enhancements to
the High Integrity Global Positioning System program (also known as “iGPS”) for
the U.S. Naval Research Laboratory.
“iGPS is
a quick and cost-effective way for the DoD to enhance the existing GPS system,
providing users improved capability in restrictive environments and under
conditions which would degrade unaided performance,” Campbell said.
The first
iGPS milestone provided appropriately equipped personnel the ability to lock on
and maintain a GPS signal even when operating in difficult environments. The
second milestone involved a live demonstration of the ability of a user to
acquire a GPS signal while moving in a vehicle despite substantial
jamming.
Both iGPS
and DTCS are technologies being developed with the DoD that Iridium believes
have promising longer term commercial applications.
Update
on Iridium NEXT
Progress
continues on the design of Iridium NEXT, the company’s next-generation satellite
network, with initial NEXT satellite launches planned for 2014. Iridium is
working with its two prime contractor candidates, Lockheed Martin and Thales
Alenia Space, to refine design proposals with final selection planned toward the
end of the year. The company also continues to work with prospective hosted
payload customers, since NEXT will provide a significant and cost-effective
means for organizations to operate important payloads and sensors in space
without the need for them to build or enhance their own satellite networks.
Through Iridium NEXT, the company plans to seamlessly replace its current
constellation with new satellites,
Page
4/8
ensuring
backward compatibility for Iridium’s customers and partners’ products and
services, while offering enhanced services, higher data speeds and flexible
communications capabilities.
1Non-GAAP
Financial Measures
In
addition to disclosing financial results that are determined in accordance with
U.S. GAAP, Iridium discloses Operational EBITDA, which is a non-GAAP financial
measure and management believes it is the most comparable measure to GAAP net
income. Operational EBITDA represents earnings before interest; income taxes;
depreciation and amortization; Iridium NEXT (second-generation system
development) revenue and expenses; and expenses associated with the proposed
transaction with GHL Acquisition. Additionally, Operational EBITDA does not
include the impact of purchase accounting and other transaction-related
adjustments that will be reflected in the post-transaction performance.
Operational EBITDA does not represent and should not be considered an
alternative to GAAP measurements, such as net income, and the company’s
calculations thereof may not be comparable to similarly entitled measures
reported by other companies. Management uses Operational EBITDA to manage the
company’s business including preparation of its annual operating budget,
financial projections and compensation plans.
The
company uses Operational EBITDA as a supplemental measure for operating
performance because, by eliminating interest, taxes, depreciation and
amortization, transaction expenses and Iridium NEXT revenue and expenses, the
company believes it is a useful measure across time in evaluating the company’s
performance. The company believes that Operational EBITDA is also useful to
investors because like measures are frequently used by securities analysts,
investors and other interested parties in their evaluation of companies in
similar industries. As indicated, Operational EBITDA does not include interest
expense on borrowed money or depreciation expense on our capital assets or the
payment of income taxes, which are necessary elements of the company’s
operations. Because Operational EBITDA does not account for these expenses, its
utility as a measure of the company’s operating performance has material
limitations. Because of these limitations, the company’s management does not
view Operational EBITDA in isolation and also uses other measurements, such as
net income, revenues and operating profit, to measure operating performance.
Iridium’s calculations of Operational EBITDA may also differ from the
calculation of Operational EBITDA or like measures by its competitors and other
companies and, as such, their utility as comparative measures is limited.
Included in this release is a reconciliation of net income (loss) to Operational
EBITDA.
Page
5/8
Conference
Call Information
Iridium
and GHL Acquisition will host a conference call for analysts, investors and
other interested parties on August 11, 2009 at 8:30 a.m. Eastern Time (ET) to
discuss this earnings release. To participate, please call the toll-free number
866-481-9047 (U.S. callers only) or, from outside the U.S., 706-902-1870. The
passcode for the live call is 23639627. For those unable to participate in the
live call, a replay of the call will be available for 30 days toll free at
800-642-1687 (U.S. callers only), or at 706-645-9291 (callers outside the U.S.).
The passcode for the replay is 23639627. To help ensure the conference begins in
a timely manner, please dial in five minutes prior to the scheduled start
time.
Forward-Looking
Statements
This
press release contains, and Iridium’s management may make, certain
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. The words “anticipates,” “may,” “can,”
“believes,” “expects,” “projects,” “intends,” “likely,” “will,” “to be” and
other expressions that are predictions of or indicate future events, trends or
prospects identify forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of Iridium to differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements. These risks and uncertainties include, but are
not limited to, uncertainties regarding the timing of the proposed transaction
with GHL Acquisition, whether the transaction will be approved by GHL
Acquisition’s stockholders, whether the closing conditions will be satisfied
(including receipt of regulatory approvals), as well as industry and economic
conditions, and competitive, legal, governmental and technological factors.
There is no assurance that Iridium’s expectations will be realized. If one or
more of these risks or uncertainties materialize, or if Iridium’s underlying
assumptions prove incorrect, actual results may vary materially from those
expected, estimated or projected.
Iridium’s
forward-looking statements speak only as of the date of this press release or as
of the date they are made, and, except as required by law, Iridium undertakes no
obligation to update forward-looking statements.
About
Iridium Satellite LLC
Iridium
Satellite LLC (www.iridium.com) is
the only mobile satellite service (MSS) company offering coverage over the
entire globe. The Iridium constellation of low-earth orbiting (LEO) cross-linked
satellites provides critical voice and data services for areas not served by
terrestrial communication networks. Iridium’s subscriber growth has been driven
by increasing
Page
6/8
demand
for reliable, global communications. Iridium serves commercial markets through a
worldwide network of hundreds of distributors, and provides services to the U.S.
Department of Defense, and other U.S. and international government agencies. The
company’s customers represent a broad spectrum of industry, including maritime,
aeronautical, government/defense, public safety, utilities, oil/gas, mining,
forestry, heavy equipment and transportation. Iridium has launched a major
development program for its next-generation satellite constellation, Iridium
NEXT, which will result in continued and new Iridium MSS offerings. The company
is headquartered in Bethesda, Md., U.S. and is currently privately
held.
# #
#
Page
7/8
Consolidated
Historical Financial Data
|
Three
Months Ended June 30,
|
||||||||
|
Statement
of Operations Data:
|
2008
|
2009
|
||||||
|
Total
revenue
|
$ | 81,679 | $ | 82,705 | ||||
|
Total
operating expenses
|
(58,786 | ) | (50,042 | ) | ||||
|
Operating
profit
|
$ | 22,893 | $ | 32,663 | ||||
|
Total
other income / expense
|
(4,218 | ) | (4,063 | ) | ||||
|
Net
income
|
$ | 18,675 | $ | 28,600 | ||||
|
As
of
|
||||||||
|
December
31,
|
June
30,
|
|||||||
|
Balance
Sheet Data:
|
2008
|
2009
|
||||||
|
Total
current assets
|
101,355 | 114,424 | ||||||
|
Total
assets
|
190,569 | 199,484 | ||||||
|
Total
members’ deficit
|
(62,230 | ) | (21,605 | ) | ||||
|
Three
Months Ended June 30,
|
||||||||
|
2008
|
2009
|
|||||||
|
Net
income
|
$ | 18,675 | $ | 28,600 | ||||
|
Interest
expense
|
4,590 | 4,597 | ||||||
|
Interest
income
|
(283 | ) | (132 | ) | ||||
|
Depreciation
and amortization
|
2,893 | 3,574 | ||||||
|
Non-recurring
transaction expenses
|
320 | 1,275 | ||||||
|
Iridium
NEXT expenses
|
1,698 | (1,216 | ) | |||||
|
Operational
EBITDA
|
$ | 27,893 | $ | 36,698 | ||||
Page 8/8